The Facts about Tuition Tax Credit Scholarships

The Facts about Tuition Tax-Credit Scholarships

Tuition Tax-Credit Scholarships are a way for legislators to allow indirect public support for private schools little or no financial transparency or accountability for student achievement..

Bills we’re watching for the 2019 Legislative Session:

  • Senate Bill 407 by Sen. Dave Rader and Rep. Jon Echols would increase the cap on tax credits to $30 million a year.
  • Please click here for information about the history of the Oklahoma Equal Opportunity Scholarship Act and Senate Bill 407 details.

 

 

Fiction:

Private school choice programs like tuition tax-credit scholarships (also called tuition tax-credit scholarships) are focused on helping children from low-income families.

Families receiving tuition tax-credit scholarships can choose their child’s school.

Tuition tax-credit scholarships improve student achievement.

Tuition tax-credit scholarships help public schools.

Tuition tax-credit scholarships are good for the state budget.

Fact:

A family of 4 earning up to $139,000 a year can receive a private school scholarship. That’s nearly triple the median Oklahoma household income.

The state’s largest scholarship-granting organization wants to lower the required percentage of donations they dedicate to serving children from low-income families.

The largest scholarship-granting organization has failed to meet the required percentage of donations dedicated to serving children from low-income families & instead wants to lower the requirement.

Tuition tax credits are tax cuts for corporations and the wealthy, shifting the burden of funding public education and other core state services to other taxpayers.

One scholarship-granting organization bragged the tax credits are “like a gift card from the state of Oklahoma.”

Redirecting resources to private schools erodes the ability of public schools to serve the 425,000 children from low-income families attending public schools.

The state is giving away millions of dollars in tax credits. In 2016-2017, corporations received more than $2 million in tax credits for donating to private schools.

Private schools accepting tuition tax-credit scholarship students aren’t required to report any information about the achievement of scholarship students.

Private schools make the choice about which students they select. (Oklahoma Watch: Scholarship Schools Exclude Disabled Students From Discrimination Protections)

Oklahoma law allows donors to tuition tax credit scholarship programs to double dip, obtaining tax credits while also claiming charitable deductions on state and federal tax returns. Source: Institute on Taxation and Economy Policy

The ability to double dip — claiming tax credits and charitable deductions — allows donors making multi-year donation commitments to voucher-granting organizations to potentially profit from their donations. Source: Institute on Taxation and Economy Policy

Scholarship-granting organizations actively advertise how donors can use the law to eliminate the associated state tax liability and even turn a profit by accepting tax credits while claiming state and federal charitable deductions.

 

Catholic Schools Opportunity Scholarship Fund

 

Sources: Oklahoma Equal Opportunity Scholarship Act, Opportunity Scholarship Fund Legislative Report, Catholic Schools Opportunity Scholarship Fund, Institute on Taxation and Economic Policy

Transparency Needed

Far more transparency is needed for the Opportunity Scholarship Act. Consistent with reporting requirements for similar programs found in other states including Arizona and Alabama. HB 1247 by Rep. Mark McBride was folded into SB 407 and would require the scholarship-granting organizations to annually report and for the Oklahoma Tax Commission to make available on its website:

  • The name and address of the scholarship-granting organization.
  • The names of the qualifying schools that received funding for educational scholarships, the total amount of funds paid to each qualifying school and the total number of scholarship recipients enrolled in each qualifying school.
  • The total number and total dollar amount of contributions received and educational scholarships awarded during the previous academic year.
  • The total number, total dollar amount and percentage of educational scholarships awarded and funded during the previous academic year disaggregated by students who qualify for free- and reduced-price meals and students with special needs.
  • Whether scholarship students previously attended a public or private school.
  • The percentage of the total amount of education scholarship expenditures spent on low-income eligible students, and the percentage of annual revenue received by the organization which was not expended on scholarships.

Scholarship-granting organizations would also be required to annually confirm they meet legal requirements under the Equal Opportunity Scholarship Act.